Reserve Bank governor Glenn Stevens says "massive investments" in gas production will soon mean LNG production capacity will reach more than 80 million tonnes a year in Australia, up from 10 million tonnes a decade ago.
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Liquefied natural gas exports have begun from some Queensland projects and are expected to increase strongly in coming years.
Things would ramp up as projects in Western Australia came online in a few years, he said.
Most of the construction job losses in Australia's iron ore sector had "probably occurred", but once LNG production capacity increased strongly in Western Australia, there was likely to be construction job losses there, Mr Stevens said.
Speaking at the Australia-Israel Chamber of Commerce in Western Australia on Wednesday, Mr Stevens told state business leaders that Australia had done very well managing the mining construction boom – and the related terms of trade boom – so far.
He said terms of trade surges in the 1950s and 1970s produced significant inflation on the way up and were followed by major slowdowns or recessions in economic activity as the terms of trade fell.
However, that hadn't happened at a national level on this occasion, when the terms of trade peaked in 2011; exceeding anything for at least a century on a 10-year average basis.
Respectable outcomes
"Inflationary pressure was relatively contained on the way up [this time], and while aggregate growth has been a little disappointing for the past couple of years, in the circumstances we face – including very difficult global conditions in the aftermath of the financial crisis – the outcomes are, I think, quite respectable," Mr Stevens said.
On Tuesday, the Reserve Bank kept the official cash rate steady at 2 per cent, citing low inflation and moderate economic growth.
Mr Stevens said the outlook for Australia appeared to be "a continuation of moderate growth" with gross domestic product growth forecast to be between 2 per cent and 3 per cent in June 2016.
"Domestic inflationary pressures are expected to remain subdued. Inflation is forecast to be in the range of 1.5 [per cent] and 2.5 per cent over the year to June 2016, and 2 [per cent] to 3 per cent over the year to June 2017," he said.
The unemployment rate was projected to remain around 6 per cent "or a little above" over the next year, before gradually declining, he said.
The national accounts, released on Wednesday, show Australia's economy grew 2.5 per cent in the year to September, seasonally adjusted.
